Buying and Holding out of State Vs In State

[Kevin M Cooney]

I live just outside of Denver, and I’m looking to buy another rental. Here’s my question. Should I buy in Denver, and focus on larger rents after I pay it off, or should I buy out of state for all cash and get immediate supplemental income?

Here’s a scenario. I can buy a duplex for $500,000 and make about $3,700 a month from that. However I’ll really only make $300 a month until it’s paid off.

I can buy a house out of state for $100,000 cash (my downpayment for a property in Denver) and get $800 a month immediately in rents.

Which one is better?

My end goal is to have enough passive income to retire and not have to work, so I like the greater rents for when they are paid off.

However, I could be scooping up a lot more properties that cost less, and be getting immediate income which would all be put back into investing.

Either way, I’m not taking any money from my investments now. They are purely there to “retire” earlier.

Any advice would be great. Thanks guys.

[Tim Herman]

@Kevin M Cooney it is the tenants job to pay off the mortgage. Start to use your calculator and see the power of leverage. Abbreviated example. 1 paid off house $100000 or 5 houses with 20% down. 3% growth 1 house grows to $134000 or 5 houses grow to $670000 in 10 years. What about the mortgage. Mortgage paid down to $65073x5=$325365. Equity=$344365. Like the Capitol One commercial"What's in your wallet". This is an abbreviated analysis I did. After the first year net rental income will be greater for the 5 houses growing rents 3% per year. Whatever market you buy in make sure it meets the 1% rule. Many posts on this forum. Indianapolis, OKC, Cleveland and others will meet that standard.